(Photo credits: Flickr – Scott Beale)
(AOF) – Wall Street is expected to fall sharply at the opening in the wake of European markets. Investors reacted very badly to the announcement that US inflation exceeded expectations in May. Consumer prices rose sharply again last month, cutting into household purchasing power and weakening the economy. This bad news could lead the Fed to further accelerate its monetary normalization, even if it means penalizing growth. Around 3 p.m., futures on the S&P500 and Nasdaq 100 fell 1.43% to 3,960.25 points and 1.72% to 12,091.5 points.
Yesterday on Wall Street
US markets closed sharply lower in the wake of the ECB’s announcements. Not only will it raise its main policy rate by 25 basis points in July, but it has opened the door to a rate hike of 50 basis points in September. These “hawkish” statements by the ECB led to a further rise in long rates in Europe and the United States. The American 10-year thus settled above the 3% threshold. The Dow Jones lost 1.94% to 32,272.79 points and the Nasdaq Composite lost 2.75% to 11,754.23 points.
The consumer price index increased by 1% in May after +0.3% in April. It is above the Reuters consensus of +0.7%. It increased by 8.6% over one year against 8.3% expected. Excluding energy and food, inflation rose to 0.6% in May over one month against a consensus of +0.5%.
The University of Michigan Consumer Confidence Index for June (first estimate) is due at 4 p.m.
The values to follow
Amazon.com is considering pulling out of an appeal for the rights to broadcast Indian Premier League cricket matches, ceding one of the world’s most popular sporting competitions to rivals ranging from the Walt Disney Co. to Mukesh Ambani’s Reliance Industries Ltd, Bloomberg and Reuters report. The duties had been estimated at an unprecedented $7.7 billion.
Costco Wholesale is considering raising its membership fees after announcing a record 90% renewal rate. The last time the Warehouse Store Owner increased their membership fees was in June 2017. Historically, fees increase every 5½ years. Gold Star and Business memberships are currently $60 per year, and Executive membership, which includes additional offers, is $120.
Coty plans to “gradually” resume its return to shareholders. The perfume and cosmetics company has made “substantial” progress in reducing its debt and its operating performance has strengthened. Coty is in the process of reaching agreements with several banks to launch a $200 million share buyback program which it plans for 2024. The company reduced its debt to 4.7 times its Ebitda at the end of the third quarter of fiscal year 2022. It aims to double debt by 2025.
Spirit Airlines climbed 2% in pre-opening on Wall Street, thanks to a favorable analyst rating. Indeed, JPMorgan raised its recommendation from Neutral to Overweight on the title, while boosting its target price from 24 to 30 dollars. The broker believes that the probability of a merger with JetBlue at the expense of Frontier is growing.